A Much Needed Win

It seems that we suddenly have a presidential campaign. Only a few days ago, the media was preparing Governor Romney's obituary, concluding that his thus far moribund campaign was essentially over. However, Romney's performance in last night's presidential debate exceeded all expectations and, for his supporters,
their wildest hopes. He managed to dominate the discussion, putting a befuddled President Obama on the defensive, while presenting himself as well-informed, presidential, and likable.

One of the most telling signs of Romney's successes was Obama's body language throughout the debate. The president was consistently scowling, grimacing and shaking his head in disagreement. He looked confused, unprepared and ill-at-ease. At one point, a camera shot of the backs of the two candidates revealed that while Romney was standing straight and tall, Obama had nervously bent his knee and was rolling his foot behind the podium.

Obama's jittery-ness was in stark contrast to Romney's poise—both in his body language and his speech. The governor was clearly well-prepared and not only defined the scope of the discussion but had reasonable and succinct responses to every attack from the president. This left Obama with little choice but to continuously harp on tired and refuted talking points; for instance, the ineffectual attack on corporate jet owners and constant reiteration of a bogus $5 trillion tax-break.

Yet what was most interesting about Romney's performance was that he displayed a couple of characteristics, previously absent from his campaign, in the most flattering manner. First, he had a clear and convincing message. He carefully outlined his thoughts and principles on a wide-array of issues and policies. While the president claimed Romney did not offer specifics, this charge fell rather flat. In contrast to his campaign so far, Romney was a man of ideas and solutions. He offered a vision for the country, which displayed that he could succeed as a leader.

Up until the debate, this has been a horrendous failure of the Republican campaign, which has largely focused on attacking the president without offering much in the way of alternatives. There was some hope that by bringing the wonky Paul Ryan onto the ticket, that Romney would delve into policy. However, the opposite seemed to happen, with Ryan's intellectualism being silenced in favor of Romney-esque stoicism. This, as the campaign's poll numbers showed and the pundits screamed, was a foolish tactic.

However, last night's volte-face appears to have moved the campaign in the needed direction. CNN's live tracker, which followed the real-time sentiments of undecided Colorado voters, confirmed the merits of offering arguments about policy and principles. When either candidate spoke about his ideas the voters responded favorably, when they attacked their counterpart the voters soured. It seems that despite the accepted "wisdom" that negative campaigns work, voters want to hear proposals.

Second, Romney finally shed the defensive stance he has held throughout the campaign. Previously, Romney frequently looked like he was trying to back away from an issue or deny responsibility. This made him appear to be weak and indecisive and allowed Obama's attacks to stick. However, last night he was a different man. He owned his record and beliefs and explained why they are right. He fought back against the president's distortions and explained nuances in a clear and reasonable manner. This made Obama look petty and dissimulative, while giving the viewer a logical argument about the veracity of the Romney-way.

This simple tactic of owning and then explaining his principles and beliefs was an enormous step toward strengthening Romney's campaign. Voters want a leader who is confident, who has ideas, and who is able to explain his policies in a nuanced but understandable manner. The Romney who was on display last night succeeded at all of this.

Hopefully, he will maintain this momentum. Obama will undoubtedly come to the next debate more prepared. Romney has to continue to shine, turning his campaign into an expression of his vision for the country, while defending his principles and policies with poise and candor. While the election is quite near, Romney still has time to make his case. A Romney in this mold will be hard to beat.

Ship the Outsource Debate Overseas

Outsourcing (or offshoring) seems to be the political battleground of the week. Both presidential campaigns have launched into a finger-pointing offensive of claiming their opponent has contributed to the shipment of American jobs overseas. The outsourcing debate was sparked by an investigation into and a series of poltical attacks at Romney's activities at Bain. The Republican campaign retorted with recriminations regarding the handling of stimulus money.

While we'll leave the fact-checking to the newspapers, the entire debate is somewhat ridiculous, particularly from Romney's perspective—the supposed voice of economic reason during this electoral season. It is based on the ludicrous proposition that outsourcing jobs is an absolute negative for the U.S. economy. In simplistic political-speech, which assumes Americans are just too stupid to understand basic economics, the argument holds that when a company either hires a foreign company to perform a specific task or moves operations abroad that it is a unilateral loss for the domestic economy.

The first time I saw this "negative" ad from the Obama campaign, I could not help but think that the gist of the comments was true and Romney should proudly own it.

But such arguments ignore basic economic truisms that are taught in any introductory economics course. Trade, whether domestically or internationally, benefits everyone. The simple concept of comparative advantage—the situation in which one producer can produce a good relatively cheaper than its competitors—underpins this logic. By definition, every producer will have a comparative advantage, thus yielding an economic logic for specialization and trade.

In simple language, this is precisely what motivates outsourcing and offshoring. Other countries have a comparative advantage in labor. It is thus relatively cheaper for them to "produce" labor. Since they are comparatively better at labor, trade frees up American resources to do what we are better at (such as research and development). We can then, for instance, trade our research for their labor, creating products that benefit both sides of the transaction at a cheaper price. This specialization and trade helps both economies grow.

The real world is naturally more complicated (short-run costs of reallocating resources are very real), but the essence of the argument holds. Outsourcing and offshoring are good for the U.S. economy (if they are done without distorting effects of government meddling). But one must look at the entire effect, not just the outsourced job to appreciate this dynamic.

So how does outsourcing help? An outsourced job means that a domestic company can now get the work done for a cheaper price (it would not outsource the job if it was more expensive to do so). This frees up resources (money) to put to other uses. A company can either cut costs, passing along savings to consumers (maybe in an attempt to increase market share) who can then save or purchase more, or reinvest the saved money into expanding the business. In truth, both probably occur and both help grow the economy. As is usually the case, a growing economy creates new jobs, most likely in sectors in which the country has a comparative advantage.

If one thus looks at the economy on a holistic level, a cheaper input to production (cheaper labor abroad) will generally help an economy grow and create more jobs. A smart business leader, economist, or president will acknowledge that it is best to have the most efficient producer or worker do the job, regardless of national borders or any other consideration. Outsourcing is thus one piece of a broader economic puzzle, which allows an economy to operate at its highest and most efficient level.

But our politicians never try to explain this basic economic fact. Whether they think Americans are unable to comprehend such simple economics or are they beholden to special interests, both the left and the right seem to be stuck to a pseudo-protectionist argument. Arguably, much of this tenacity to the outsourcing-is-evil argument is due to political expediency. It is much easier, in a world of sound-bites, to make a a simple accusation of sending jobs to India, than explain an economic principle. But such expediency is damaging, not only by dumbing-down political discourse but by empowering certain groups to take-advantage of such language to further their own narrow desires (think unions and noncompetitive industries who want protection).


The Romney campaign would be wise to take a new angle in this debate. Much as New Jersey Governor Chris Christie does, Romney need to take an approach of separate, own, and educate. He needs to separate the fact from fiction, dismissing Obama's ridiculous conclusions about outsourcing, proudly own what he has done, and educate the people on why such actions are good. In other words, Romney has to stop looking like he is running from some greedy business transactions and start explaining how a smart economy works.

Such a change in tactic would not only benefit the United States by pushing our economic policy toward sound principles, but greatly help the Romney campaign. He'll regain the image of a responsible and educated economic steward, earn respect for standing up to smear campaigns and distortions of economic facts, make Obama look like the economic lightweight he is, and rise to a presidential level. It is a novel political strategy, but one that if properly employed will reap tremendous rewards for a candidate who is too often criticized for lacking a backbone.

Huntsman Has Some Potential

Former Utah governor and ambassador to China, Jon Huntsman has formally announced his candidacy for president.  He joins a thick field in the GOP primaries, most directly competing with Mitt Romney and Tim Pawlenty for the moderate and establishment wing of the party.

However, Politico seems to think there is little room for Huntsman in the mix, although conceding that

The former governor’s aim is to appeal to independents and moderate Republican voters that the rest of the field has so far largely ignored. While Huntsman’s opening video calls him the “ultimate conservative,” he has taken moderate positions on the environment, immigration and supports same sex civil unions....

Depending on how Huntsman's campaign shakes out, these moderate positions may very well be the ticket the GOP needs to successfully court independent voters and give Obama a much needed one-way ticket back to Chicago.

Nevertheless, some on the right have already ripped into Huntsman for his role as Obama's ambassador to China, claiming that by working with the president he has become tarnished goods.  Rush Limbaugh cries that "I also know that Reagan never served in Jimmy Carter's regime or administration.  Jon Huntsman did serve in Obama's; he was ambassador to the ChiComs."

Fortunately this argument is completely backwards.  What better ammunition against the current administration than someone who served in it and left.  Not only does Huntsman have more (and highly relevant) foreign policy experience than Obama did when elected, but he has the endorsement of his (potential) opponent. Obama would be ill-at-ease to criticize the foreign policy of a man he appointed to lead the relationship with one of the world's most important nations.  Just imagine Huntsman's potential response to Obama's foreign policy criticisms during the first presidential debate!

"Yes, Mr. President, I believe it was you that expressed confidence in my ability to manage foreign affairs when you chose me as ambassador to China!"

The Democrats' Campaign Strategy (Or Their Biggest Fears)

The Democrats are growing apprehensive about the upcoming midterm elections. In a fundraising effort, the Democratic Senatorial Campaign Committee (DSCC) recently mailed an impassioned plea for campaign contributions. The letter, which was signed by Vice President Joe Biden, was filled with emotion and scare tactics.

The letter continued to play on two main themes of recent Democrat campaigns. The first was the tired theme of “Blame Bush”. The current administration cannot seem to avoid the siren call of Bush-bashing that is increasingly falling on deaf ears. This rhetoric certainly helped Obama get into the White House, but it is questionable nearly two years later if it will really convince any but the most diehard Obamaniacs to open their checkbooks.

Besides continuing to harp on the Bush era, the letter also attempted to paint the Republicans as obstructionist and disinterested in helping America. For instance it stated, “I [Joe Biden] have served in the Senate for 36 years and in all of that time, I have never seen more Republicans committed to permanent, unyielding obstruction.”

However, what was most interesting was a bookmark insert, included in the mailing, that outlined the “3 REPUBLICANS WE MUST DEFEAT IN 2010.” Surprisingly, the three are not exactly household names. The handout named Richard Burr (NC), the current Senator from North Carolina, Roy Blunt (MO), currently a Congressman from Missouri, and Rob Portman (OH), formerly a Congressman from Ohio, Director of the OMB, and US Trade Rep. All three are currently running for Senate.

The pitfalls of all three candidates, according to the insert, were their connections to Bush. Burr “prove[ed] his allegiance to the Bush-Cheney-Rove ideology, [by] call[ing] in Karl Rove himself to help his reelection campaign.” Blunt, the “former House Majority Whip helped turn President Bush’s disastrous agenda into law while accepting thousands of dollars in contributions from Big Oil.” Portman is “‘A Bush Guy,’… and is trying to hide his past as ‘the face of the Bush Administration on two issues – trade and the economy’ and a key architect of our nation’s economic crisis.”

It is interesting to see who the Democrats have decided to aggressively target. According to The Cook Political Report, Burr’s seat is designated “Likely Republican”. On the other hand, the seats that Blunt (currently held by Kit Bond R-MO) and Portman (currently held by George Voinovich R-OH) are running for are marked as clear toss-ups. Cook also mentions Bunning (R-KY) and Gregg (R-NH) as the other two toss-up Republican seats. Why the Democrats feel Burr is a bigger threat (or easier target) than Bunning or Gregg is unclear.

Such campaign tactics are common – on both sides of the aisle – and despite the vitriol are unsurprising. However, it is clear that the Democrats have offered little variation in their strategies over the past few years. The overused blame-Bush and obstructionist-Republican talking points continue to remain the staples. Yet, as Obama continues to length his time in office the former becomes less convincing. Likewise, the latter, while probably more effective, fails as the Republicans begin to offer more concrete ideas (for instance at the Health Care Summit). It will nevertheless be interesting to see if or how this strategy changes as November approaches.

For some of the most interesting highlights from Biden’s letter, see below:

• “After eight years of misguided leadership, our economy was in shambles….”
• “We were fighting two wars – one without reason, the other without focus….”
• “After nearly eight years of drift, the President has put in place a strategy for success in Afghanistan.”
• “And as we saw in Massachusetts, Republicans want to exact a political price for our efforts.”
• “There are only two possible motivations for their actions… Either they want to return to the destructive policies of the Bush-Cheney administration, or they think the only way they can succeed is by causing us to fail. What this cynical strategy fails to recognize is that if we fail, America fails and the American people pay the price.”
• “We simply cannot return to George W. Bush’s America."

The State of the Perpetual Campaign

“We can’t wage a perpetual campaign.” So said President Barak Obama in a State of the Union address that was arguably another stump speech in a long-line of campaign speeches. The address was mainly an attempt at resetting his presidency to a time, a little over a year ago, when the President was popular and perceived he had a mandate to govern. Rather than drastically alter his direction, Obama emphasized a number of trends that have been unvarying cornerstones of the past year, namely populism, an anti-Washington sentiment, and the call for more government.

His populist stance was evident throughout the speech. While he admirably accepted some responsibility and admitted to gaffes, he largely played to the misgivings of the masses. He continuously bashed Wall Street and banks, targeting bonuses and the bailout. He said, “[W]e all hated the bailout. I hated it….”  Even while appealing to the grand notion of bipartisanship he attempted to separate ‘the people’ from the ‘elite’ by, for instance, offering an end to capital gains taxes, but only for small businesses.

This populism is rather disingenuous and anti-intellectual, as most populism is, and will only serve to foment fault-lines in American politics. All of America is responsible for the economic meltdown, not just Wall Street. By refusing to indict the average citizen for his mistakes alongside Wall Street, Obama is reinforcing a culture that dismisses personal responsibility.

The second major theme was the continued attempt to portray himself as an outsider to Washington. His repeated mantra was “Washington has been unable or unwilling to solve any of our problems.” It is a time-tested tactic for campaigners to portray themselves as outsiders. America habitually wants new visions and ideas and elected Obama a year ago largely based on this successfully transmitted message.

However what worked during his ‘real’ campaign will largely fall on deaf ears now. After a year in office, Obama is Washington. He said this much when castigating his party for their failures, “To Democrats, I would remind you that we still have the largest majority in decades, and the people expect us to solve problems, not run for the hills.”

Obama’s insistence on railing against Washington is interesting to say the least. It shows that he has yet to fully leave the campaign trail. From his perspective, this should be worrying as America has shown that it does not appreciate this politicking. America wants a president that leads not one that is on the campaign-trail.

The final major theme was his insistence on Big Government. Roughly two-thirds of his speech focused on the economy and rightly so. However, his entire approach of a paternalistic big government saturated his rhetoric. While his healthcare discussion was moderated, his language elsewhere continued the same cadence that drove the healthcare issue during the first year.  A prime example of this misguided economic policy was his discussion on college affordability. He stated:

And let's tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years –- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.

Now this sounds noble and, on the surface, profound. After all, every America should have access to college and most understand the heavy load from student loans. However, if one spends a few seconds considering the ramifications of the plan the economics simply fail.

For starters, if debt is forgiven it means someone has to cover the costs. There seem to be three options – the taxpayer, the lenders, or the schools. If it falls on the lenders, well they simply will stop lending. No business will be willing to operate at a loss and so such a plan will reduce available loans. If it’s the taxpayers, well we all know the problems there. If the schools have to shoulder the burden it will reduce the quality of education as schools would be forced to cut programs, salaries, and other expenditures. Alternatively, it would give schools incentives to only admit those who could pay their own way, thereby restricting access to universities (particularly the elite) to the rich.

Likewise, Obama’s plan could create a perverse incentive for individuals to get frivolous degrees. Higher education is an investment in one’s future. While many enjoy learning, a higher degree should generally only be pursued if it offers a positive return. Such a program would encourage people to complete degrees that have little bearing on their career paths. While this is certainly noble and learning is a paramount value, it should not be done at the expense of demolishing our education system.

This is but one example of the administration’s warped economic perspective. Obama, while often pure in aims, far too often attempts to correct the symptoms rather than address the underlying problems. It is economically unwise to expand government in order to force changes in the price one pays without addressing the underlying cost of the product. This backward economic principle only serves to grow government and exacerbate problems.

However, despite the many flaws of the address, credit must be given where it is due. Obama did make a number of strong points and called for some positive changes. First he stated, “We need to make sure consumers and middle-class families have the information they need to make financial decisions.” The flow of information is a principal aspect of free competitive markets and should be applauded. Second, he called for off-shore drilling and the construction of nuclear plants (amongst other proposals) both which will create jobs and promote energy independence. Third, Obama invited both parties to offer ideas for healthcare reform. He stated, “But if anyone from either party has a better approach… let me know.” Hopefully this is not mere rhetoric and the Republicans will take advantage.

Obama has work to do. Hopefully, he can step up as a leader, dismiss the big government, partisan, and populist focus of his administration and end his political campaign. He seems to have learned some lessons from the past year, and particularly Massachusetts, but he is not quite there yet.

The Obama Campaign

One of the driving forces behind Obama’s current failures is his inability to switch from being a campaigner to a leader. His foremost skill-set/tactic was that of being a great mobilizer and orator. He was able to latch-on to and stimulate the popular anger. He was able to inspire and incite new voting blocs- particularly the youth. Furthermore, he was successful in being able to point his finger at the establishment and pass blame. He was masterful at this and it pushed him straight into the White House. All of this is worth spending some time on and studying, especially if the new Republican establishment wants to be successful.

However, this seems to be the only amazing talent that Obama possesses. He has utterly failed to make the transition from campaigner to president. This can easily be seen in the AIG disaster, where rather than positioning himself as the President and leader of a failing economy, he jumped on the bandwagon of name calling and finger pointing. This tactic would have been potentially useful as a candidate, but as we have seen in the news, as President it has completely blown up in his face.

Likewise, we see this failed transition in his general management of the economy and his inability to be bipartisan. He has failed to draw Republicans across the aisle and has given near free reign to Congressional Democrats. He has failed to stand as a leader and offer the market strong ideas and confidence in our future.

This has hurt him deeply. Overall, America’s confidence in Obama has fallen. What America liked in him during his campaign was exactly his ability to campaign (this is also why he beat Clinton). America liked that he disparaged the past eight years. He is now showing that there really was no substance to this form. That, as most McCain supporters saw, there was no depth to his ideas. I liken him to a cocky college freshman, who struts onto campus, head filled with pride after having been a high school senior for a year. Just like the freshmen, Obama talks a big game, thinks he can take on the world no problem.

We are now entering those first finals- when the reality is beginning to sink in. Obama has fortunately pulled back in his campaign styled rhetoric and showing a little more presidential flair. Hopefully, this sticks. I don’t want any further damage done to this country. But I doubt that he has the abilities to serve as the leader this country needs. Maybe he’ll learn in the next few years- but I think he is more likely to be Jimmy Carter II than the Great Changer that he campaigned on.